There’s at least one way to play the stock market crash. Some people are selling into the rallies, though such events are rare right now. Others are buying shares in their oversold wish-list companies. But there’s another way to navigate the coronavirus sell-off: stock picking. In other words, investors should disregard indexes that track the market. Instead, they should buy what’s proving popular.
“We should buy quality recession-proof stocks, because that’s what works when the economy’s on hiatus,” Jim Cramer said this week.
But the next Canadian recession, if indeed we’re facing one, will be different. What worked last time might not work this time. Luckily, there is a way to see what might be popular during the next recession. And that’s to see which stocks didn’t tank during the stock market crash Monday. The TSX Index was down by 9.9% by close of play. Let’s see which names outperfromed it.
Believe it or not, cannabis investors braved the markets this week. Cronos Group was one of the few stocks to emerge positive from Monday’s bloodbath. Sure, it’s only up 4.5% on average over the previous five days of trading. But compared to the rest of the market, that’s a phenomenal outperformance.
That even beats Newmont, the next stock on our list. The world’s most productive gold miner was up 5% Monday, beating the market. However, the stock was negative by 11% overall for the five days leading up. Still, the upswing against the sell-off is good to see and denotes a recession-proof stock. Barrick Gold was also positive Monday, up 5.7%. Kinross Gold really broke out, though, gaining +17%.
Other sectors beside gold weren’t well represented. However, one financials stock beat the Big Five banks and the top insurers. Power Financial was positive by less than a dollar, but nevertheless, it showed its recession-resistant properties. Power Financial is diversified across key financial services assets such as interests in Great-West Life, IGM Financial, and Europe’s Pargesa.
Loblaw was down a couple of points. That means that this name doesn’t make the list. However, the stock is so flat as to denote relative safety amid a painful TSX sell-off. This shows resilience. The stock is a solid pick for its range of defensive attributes. These include its online presence, medical goods exposure, and consumer staples defensiveness. This diversified mix makes Loblaw a near-perfect buy.
It could be months or it could be a year, but sooner or later, society will absorb the coronavirus. What communities around the world are experiencing could become the new normal to some extent. Eventually, pandemic panic could become baked in. One thing’s for sure, though: the markets will bounce back in time.
It’s the lucky investor that can find upside during the stock market crash. However, some stocks are beating the rest. Gold as a commodity is at December levels, showing that there may be safer havens after all. Investors should consider a mix of gold, insurance, and consumer staples for a solid defensive portfolio, along with apartment REITs and utilities.
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